This is a blog by a former CEO of a large Boston hospital to share thoughts about hospitals, medicine, and health care issues.

Thursday, December 20, 2007

An idea for US News and World Report

Here is an open suggestion for Avery Comarow, the editor of the annual US News and World Report ranking "America's Best Hospitals." Why not add to your algorithm extra points for those hospitals that voluntarily publish clinical indicators of the degree to which they harm patients? I am not talking about the usual hodgepodge of outdated CMS data, which are available anyway. I am talking about substantive clinical metrics, like central line infections, ventilator associated pneumonia, and the like. Or the ultimate, the hospital standardized mortality rate calculated by the Institute for Healthcare Improvement.

I can already hear the arguments against this. Who is going to validate the numbers? Which definition of central line infections should be used? How would you compare from hospital to hospital?

Please, put all that aside. Let's just accept as a premise that hospitals that choose to post these numbers do so not for comparative or competitive purposes, but rather to hold themselves accountable to the public for their efforts in quality and safety improvement. Shouldn't that be worth something in the US News listing?

A fallback, if you don't want to change your algorithm. Just create a special box listing the hospitals that post these kinds of results, along with their url, so people from hospitals around the world can check in and make their own judgments about the usefulness of this approach.

Avery, you have become a force in this field. As noted on your blog, your perspective uniquely qualifies you to observe and comment on the efforts by hospitals and other health care providers to improve care and patient safety. Why not use that influence to push the industry along to greater heights by giving space to those who risk holding themselves accountable in this manner?

15 comments:

Avery C.
said...

A great idea--in concept. I promise to put aside boring notions of credibility and definitions and chew on this. I'll be monitoring reactions here and on my blogsite (http://health.usnews.com/blogs/comarow-on-quality/index.html) with an open mind.

I understand the medical stats is a sticky situation, hopefully someone will have an answer, but what about factoring whether hospitals have transparent pricing? that is much simpler and [arguably] just as important.

Paul is the expert on this. But "transparent pricing" is oxymoronic given that sticker prices have very little to do with the actual charges for a given patient. Payments are negotiated with health insurance carriers and vary by employer and employer group. Medicare reimbursements are in a universe of their own. Paul, correct me if I'm wrong, but my impression is that only the uninsured are charged full freight, and most of those charges are written off.

In other words, if you and Paul and I call the same hospital and ask what we'd be charged for the same procedure, we could get three much different answers--and we're only talking about hospital charges. Physicians' bills are another story.

In the past I've used the US News rankings in various categories. Sometimes I've learned, the hard way, that their priorities didn't match mine. In the area of health care (having experienced a lot of it this year) it makes a BIG difference to me whether a provider is committed to openness.

Transparency in pricing is a big deal too, but first on my list is whether they promise to let you look under their rugs to see if anything's been swept there.

(For some reason I'm reminded of when I was 5 years old, eating supper in the kitchen. Mom went to the living room, telling me to call her when I was ready for dessert. I went and got her, and as I brought her back into the kitchen, I told her "Now don't look under the table." It seems that's where I'd decided to put my peas, figuring she wouldn't notice.

Just about right, Avery. Not only are there different prices for different insurance companies, but we are required by contract with those companies NOT to disclose them. But, even uninsured people very, very rarely pay anything close to full charges in any hospitals I know about -- excepting out-of-country wealthy people who are not insured, pay cash, and choose to fly across the globe to see one doctor or another.

You're absolutely right Avery, there is absolutely no price-value connection in health care. But there should be. And with the growing consumerism movement, MEANINGFUL price transparency will be more of an issue.

Recently I attended a SIMPD.org conference and was proud to see the energy in the cash physician movement. There was a lot of discussion about how these docs bargained with local hospitals, imaging centers, labs, for vastly reduced prices. Economics 101 says consumers want transparent prices and they'll begin to demand them when its their HSA $$s on the barrel.

In my view, that's the whole point. If we can't see what's going on inside, it ain't transparent!

What particularly gripes me is that some hospitals in Boston (and I presume elsewhere) hide the fact that they've negotiated higher payments from a given insurer, strictly for marketing reasons. Given what health insurance costs the society these days, I think that's disgusting. And if they're not ashamed of it, why not let us know?

Thanks Paul, most hospital administrators don't want to discuss the pricing fiasco that is modern medicine.

I'm struggling to wrap my mind around something and I wonder if you can help. Recently the AMA had on article on the "most favored nation clause" and insurance contracts. Can you explain this and do you support legislation to change that? How much of an impact could it have on pricing?

OK, Avery, I will add my vote for Paul's suggestion, even though I can see it being susceptible to manipulation. Like hospitals only posting quality statistics that happen to favor them, and still sweep their failures under the rug. But at least it's a start, and a kick in the pants from anyone and everyone is what hospitals need right now.(And doctors do too, but that's another whole subject.....)

It doesn't detract from Paul's proposal to tell you that he asked me a few days ago if I'd have a problem if he went public with the idea. I replied that I didn't, and added that I liked the concept but had a few irritating questions such as A, B, and C.

He emailed me this morning that he'd posted. I took a look, commented, and then posted on my own blogsite.

a heart cath should cost the same for 75 year old grandma as it should be 40 year old pappa.

If I go to the store and buy a pair of jeans, I will pay the same retail price as everyone else does. What insurance companies and Medicare have done is essentially "pre-purchase" health care services at whole sale prices, without guaranteeing that the service will be provided. They have received the benefit of the purchase in bulk, with out paying for the bulk.

It is as if I went into JC Penny. Told the clerk I would like to buy a pair of jeans for the same price that you would offer a distributor who is buying 10,000 pairs of jeans. I would like that price, but I am only buying one pair.

Relate that to Joe Onthestreet who gets his heart cath for 30 cents on the dollar because his insurance company says this is our price. Take it or leave it. There is no guarantee to the hospital/doc that the volume will be there. Only that the discount price is. So to guarantee that volume is there, the volume is created. It forms a revolving cycle of increasing volume, artificial or otherwise, on decreasing revenue. It is a LOSE-LOSE proposition.

It's the same as going to your primary care doctor. The doctor, by nature of large regional, powerful insurance companies, has to accept the discounted price or risk being "left out" in the cold. He/She has to accept discounted prices with no guarantee that the volume discount will result in volume.

The problem is. Every insurance company has gravitated to the same game and has buried the primary care doctor with their monopolistic price actions.

The doctor/hospital should post their price. Period. If the insurance company wants a volume discount, they should pre pay a guaranteed sum, just like a whole sale distributor would.

How Medicare/insurance companies get away with their tactics is beyond me. If doctors tried to organize en mass in regional organizations to increase bargaining with insurance contracts, the FTC would be all over them for collusion.

I basically agree with your comments about the lack of volume guarantees vs sharply discounted prices from list paid by CMS and private insurers. Partially in their defense, the insurers would argue that they are providing ACCESS to a large number of lives when and if those members need medical services.

That said, my employer negotiated a volume discount with a major airline, but the discount is contingent upon providing a certain amount of business (in the millions of dollars) each year. If we miss the volume target by even a little bit, we lose the discount on all the business we gave them for that year. This seems like a fairer approach. Moreover, in the case of prescription drugs, the retail drug chains earn a gross margin from cash paying customers that is approximately 15 percentage points higher than they earn on the same drug when paid by a third party insurer. So, if insurance pays $100 (including the member copay) for a 30 day supply of a branded drug, the cash customer will pay about $115. This strikes me a reasonable vs the ludicrous hospital chargemaster rates that can be anywhere from 3 to 10 times or more the amount that the hospital routinely accepts as full payment from CMS and private insurers. I wonder how hospital CEO's, CFO's and other executives would react if they were on the receiving end of such outrageous bills and then had to deal with aggressive collection tactics to boot.